Bitcoin (BTC) advanced as high as $ 44,600 on August 7th today, increasing hopes that this will mark the start of a new record run, as it did in October 2020.
At least two indicators suggest that this might happen. The first is the Entry-Adjusted Net Unrealized Profit / Loss (NUPL) from the crypto market research institute Glassnode, which shows whether Bitcoin is currently profitable or not.
NUPL gives hope
A NUPL above zero indicates that the market-leading cryptocurrency is currently generating profit, while a value below zero indicates net losses. The more the NUPL deviates from zero, the better investors can draw conclusions about an imminent upward or downward trend.
The degree of deviation is illustrated by the crypto market researchers with a heat map, on which during an uptrend red means the imminent “abandonment”, while orange indicates “hope”, yellow indicates “optimism” and green represents the firm “conviction” of investors. Again, blue suggests total “euphoria”.
In October 2020, Bitcoin’s NUPL climbed above zero, as a result of which the color of the heat map improved accordingly from yellow to green, after the indicator was still in the red area at the beginning of the year.
This improvement was indeed followed by a juicy upswing that resulted in a record run that flushed Bitcoin from $ 10,000 to $ 65,000.
Later, Bitcoin went back below 30,000 US dollars, a phase in which the NUPL turned into the phases of “greed”, “denial of reality” and “fear”. However, with sufficient purchasing power at the US $ 30,000 mark, the price was able to catch up, whereupon the indicator was able to switch from fear back to optimism.
When Bitcoin was recently able to climb the 40,000 US dollar mark again, the key figure was set to “conviction” again for the first time since October 2020. A significant change in sentiment, which Lex Moskovski, chief investor of Moskovski Capital, also highlights:
“We are back in the phase of conviction.”
The mood barometer “Fear-And-Greed-Index” is similarly optimistic, because a value of 69 indicates “Greed”, which is clearly to be interpreted positively. This was last achieved in May, when Bitcoin was still soaring.
Long-term investors create shortages
The analyst Will Clemente points to another indicator that suggests the start of a record run like in October 2020. He draws this conclusion from the current dynamics between long-term and short-term Bitcoin investors.
According to Clemente, short-term investors have currently sold excessively large amounts to long-term investors, as a result of which they now own almost as much Bitcoin as in October 2020.
“Long-term investors currently own more than 66% of the available volume in circulation, which means that short-term investors are now only just under 20%,” the analyst said. And further: “Before the start of the record run last October, long-term investors were also at 68%.”
From this it can in turn be deduced that the current upswing is being driven by investors who will not sell again anytime soon, which will further reduce the available supply and accordingly will probably catapult the price even further upwards.
Bitcoin was able to achieve an intermittent daily high of 44,600 US dollars on Saturday, the first partial profits were booked out again, and most recently a price of almost 43,500 US dollars is on the table.